Community Budget Workshop - March 27, 2025
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Community Budget Workshop - March 27, 2025
Finance Director Carla Carvalod Graf and City Manager Amy Cunningham led the annual community budget workshop, presenting the city's financial outlook, operating budget, and capital improvement program for fiscal year 2025/26. The workshop emphasized community input and outlined the path to budget adoption on June 24, 2025.
Revenue Overview
- Novato receives 7 cents of each property tax dollar, a share locked in by Proposition 13 and unchanged since the 1970s.
- The city's sales tax rate will rise to 9.25% effective April 1, 2025, due to the passage of Measure M in November 2024. Novato retains 2% of the total sales tax (1.25% base + 0.75% Measure M). Three Marin County cities remain at 8.25%.
General Fund Forecast
- Without Measure M: A systemic deficit of $3.4–$3.8 million annually from FY 2025/26 through FY 2029/30.
- With Measure M: Starting in FY 2025/26, the forecast shows a surplus of $6.8 million after covering the deficit. Measure M is projected to generate $10.6 million in FY 2025/26; $3.8 million (36%) fills the systemic deficit, leaving $6.8 million (64%) for capital projects, pension trust, reserves, and salaries.
- Key assumptions: no personnel increases (labor negotiations ongoing), moderate revenue growth (2–3% for taxes), and inflation factors for non-personnel costs (0–4%).
Operating Budget (FY 2024/25)
- The amended budget shows a $3.5 million deficit, improved from the adopted deficit of $4.2 million after mid-year adjustments and inclusion of Measure M revenues ($2.6 million expected in June 2025).
- Revenue ($56.3 million): 35% property tax, 34% sales tax, 9% other taxes, 10% charges for services, 4% grants/fines/other, 8% transfers in.
- Expense ($59.88 million): 62% salaries & benefits, 14% professional services, 10% operating expenses, 3% utilities, 3% other expense, 8% transfers out.
- Personnel: 198 full-time equivalents (FTEs), down from 234 in the early 2000s and from 208.5 before the 2020 reduction of 17 positions (8% cut). The city has kept FTEs under 200 since 2020.
Community Priorities Survey (Preliminary Results)
- Top three priorities as of March 27 (survey open until March 31): 1) Public Safety & Emergency Response Services, 2) Streets & Medians Maintenance, 3) Business Retention & Attraction. Council had already allocated $200,000 in Measure M mid-year funds for street and median maintenance.
Capital Improvement Program (CIP)
- The five-year CIP plan is updated annually. Objectives include prudent fiscal management, initiating high-impact projects, closing completed projects, and simplifying fund sources.
- Completed projects in the past year: Grand Avenue Bridge (after 15 years, $4.3 million in grants), Delong-Diablo Corridor Safety Enhancements (13 curb ramps, 1,000+ feet of bike lanes), 2024 Pavement Rehabilitation, ongoing Hogue Playground upgrades, and wood pole replacement.
- Ongoing major project: Novato Boulevard Widening (80% ROW acquisition, 90% design, PG&E undergrounding expected May 2025, construction 2025–2027).
- FY 2025/26 proposed new funding for carryover projects: $2,777,250, including North Redwood Blvd Corridor Study ($366,000), Replacement of Wooden Streetlight Poles ($400,000), Accessibility Upgrades at San Marin & San Andreas ($550,000), and MS4 Trash Capture Devices ($811,250).
- Proposed new projects (total $6,453,000): 2026 Annual Pavement Rehabilitation ($3,000,000); Hamilton Amphitheater Playground Improvements ($700,000); HVAC replacements at Hill Community Room, Margaret Todd Senior Center, and Police Station ($1,065,000 total); Police Department Water Infiltration ($200,000); and Safe Routes to School projects (Sutro Ave sidewalk gap closure $590,000, quick build improvements $228,000).
- Funding sources by category: Streets & Pathways (TAM Measure AA, Gas Tax, SB1, vehicle registration fees, developer fees, grants); Parks & Recreation (Quimby fees, County Parks Measure A, developer fees, general fund); Municipal Buildings (general fund only).
- Five-year capital revenue estimates (FY 2025/26–2029/30): $5.56 million in FY 2025/26, declining to $4.02 million by FY 2029/30. Includes $640,000 in long-term maintenance, $1.39 million in SB1 gas tax, and $1.12 million in TAM Measure AA. Measure M provides $1.88 million in FY 2025/26 (future years TBD).
- Secured grants: $10.3 million TAM Major Streets Program for Novato Blvd widening; potential $450,000 for Sutro Ave and $175,000 for quick build improvements.
Question & Answer Session
- City staff (department directors, police chief, etc.) were available for questions. The workshop was recorded and will be posted online. Specific public questions were not transcribed in the record.
Key Outcomes
- The budget priorities survey remains open until March 31, 2025. Residents are encouraged to participate via www.novato.org/community/get-involved/open-novato.
- Upcoming public meetings for budget input: Finance Advisory Commission (1st Thursday monthly, 8 a.m.), City Council Study Session (April 8), City Council Budget Workshop (May 13), City Council Budget Hearing (June 10), and Budget Adoption (June 24).
- The final FY 2025/26 budget will be adopted on June 24, 2025, reflecting community priorities and the strategic plan (2023–2025 goals such as Living Well Together, Great Places, Environmental Stewardship, A City that Works, Economic Vitality).
Meeting Transcript
Okay. Good evening. And welcome and thank you for coming to our annual community budget workshop. This workshop is designed to provide the community with information about the city's budget, both operating and capital. Serve as a forum for you to ask questions of city staff. We have all of our department directors here tonight to assist in responding to your questions. And the workshop is also intended to allow you to provide feedback into the budget development process as we work towards an adoption in uh June of 2025. We understand your time is valuable and we appreciate you being here and spending time with us in person, especially tonight. This workshop is also being recorded and will be posted online in the next few days so that those who weren't able to attend in person or watch on the live stream can watch it on Zoom later. Thank you. And now I would like to introduce our finance man our finance director, sorry, Carla, Carla Carvalod Graf. I was trying to make sure that I didn't say the wrong Carla. It's gonna be tricky. So as City Manager Cunningham said, we want to welcome everyone to the 2025-2026 budget workshop. Community participation is a critical part of the budget process. And as Amy said, I'm the finance director for the City of Novato, and I'm also a fellow Novatoan. With me tonight is our department head team, including our newest member, our assistant city manager, Carla Hanson, and next to her to my left is um city clerk Laura McDowell. Next to me is City Manager Amy Cunningham. And then to my right, we have interim public works director Tim Burke, uh community development director, Claire Hartman. This is a mouthful, parks and recreation and community services director, Katie Gauntlet, and of course our chief of police, Jim Noggle. They are um here to answer any questions about um their areas within the budget. We will review revenue, our general fund forecasts, the budget development process, the operating budget as it stands for fiscal year 24 or 25, as we are currently in the budget assumption development phase of the operating budget. And of course, the departments are working on their budgets or have worked on their budgets, and we are in the review process. And then at that point, I'll turn it over to Tim Burke for the CIP um draft budget, and then we move to questions and answers and next steps. So I wanted to start with an overview of revenue before we get into the nuts and bolts of the budget. The city's major revenue streams are property tax and sales tax. You may have seen this graphic previously as we've used it to show the comparison of the proportional share of property tax for the city of Novato to our fellow Novado agencies. Novado gets 7%, 7 cents of each dollar. And we're there on the slide in between other and the College of Marin, and there's simply nothing we can do to change that seven cents. Um and the other agencies are like the Marin County Library, flood control, mosquito abatement, and there's a list of um smaller agencies. Uh the reason that we are at the 7% and that that can't be changed is that many years ago in the 70s, uh property tax, the property tax rate was reduced by 19%. And then proposition 13 lock Novato into the 7% rate going forward. And then while property values increase, it's a slower growth area. It's just incremental increases. The other revenue stream I mentioned is sales tax. There um, these are the rates that are effective April 1st, 2025. With the passage of Measure M in November, the city's sales tax rate will be 9.25%. And as you can see from the chart, several other cities in Sonoma and Marin County have been listed. And our sales tax rate is comparable to many of our neighbors. And there are there are three cities that have a uh rate set at 8.25%. This was reduced from the four cities as a mill valley increased from eight and a quarter to nine and a quarter. And um all the rates on this chart are effective April 1st. So the portion of the locally controlled sales tax that Novato has is 2%. We are showing this in two slices of this pie chart. What we are get what we were getting prior to Measure M, which is the one and a quarter percent, the red uh slice of the pie, and then the measure M slice is a three-quarter cent, and that's the gray slice of the pie. The state cap is nine and a quarter. Sales tax can be higher than nine and a quarter for some special district taxes, and as you saw on the previous slide, a couple of neighboring cities have gone past the cap. But us taking up our space in that cap allows us to keep funding local to ensure that city services to the community come out of the suppressed state that they have been in, although we recognize it will take us a while to rebuild. To give you the financial picture, we have updated the general fund forecast and basically the general fund is where our operating budget resides. We work with a consultant to do this and have had this forecast in place for the last two years.
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